Whatever happened to the big Ukrainian-style sell-off? Sorry folks, but it's bad news for the doomsters. Overnight the S&P 500 rebounded to a new record high after Vladimir Putin decided he really would heed Tony Abbott's warning, and "back off" Ukraine. Yes, our hero and leader has Vladimir Putin quaking in his bear-skin vest.
In more bad news for the "market crash" brigade, the S&P/ASX 200 is set to soar again today, the futures market suggesting it will jump over 40 points. ASX 5,500 here we come? I wouldn't be surprised…
Of course, Foolish investors will know we're not afraid of Vladimir Putin, or of the prospect of war in the region… not withstanding that war is of course a terrible outcome and event.
Warren Buffett isn't afraid either, telling shareholders in Berkshire Hathaway (NYSE: BRK-B) "the mother lode of opportunity resides in America." And nor is our own Joe Magyer afraid, earlier this week telling CNBC viewers there was nothing for long-term Foolish investors to worry about.
Source: CNBC
Joe knows a thing or two about investing… The Wall Street Journal recently named his Inside Value newsletter the #1 best performing investment service of its kind in America. In somewhat of a coup for Australian investors, just over a year ago I lured Joe to our shores. He saw opportunities — potentially HUGE opportunities — for his unique investing style to flourish amongst the hundreds of under-followed, under-appreciated and over-looked ASX stocks.
You'll be hearing more about Joe in the coming days when I'll be introducing you to just a couple of his ASX stock picks on what I think will be a VERY profitable adventure. Watch this space.
Buffett: that's not a war…
The other investor who knows a thing or to about investing is the aforementioned Warren Buffett. The man widely acknowledged as the world's greatest investor bought his first stock in 1942… during the height of World War II. "I will tell you the macro factors were not looking good," says Buffett more than 70 years later. You can say that again!
It makes the current situation in the Ukraine look like a battle between 7 year old boys and their pop guns. Walking the walk, Buffett told CNBC he was in the process of buying a stock on Friday "but it's cheaper this morning and that's good news." I'm guessing CNBC might have been a little disappointed with both Joe Mayger and Warren Buffett's comments. Broadcasters like doom and gloom even more than Putin likes wrestling with tigers. In the media industry, pessimism sells.
Another horror story!
The only bad news I can conjure up here at Fool HQ is that most of the stocks on the Motley Fool Share Advisor scorecard joined in yesterday's broad-based ASX market rally… despite there not being one single bank amongst our current 18 buy recommendations.
Want to see what the bad news looks like?
Source: Intra-day daily change in all Motley Fool Share Advisor ASX scorecard stocks, as per Google Finance on March 4 2014.
Awful, isn't it? I jest, of course, although there is a serious side. Like Warren Buffett, I too prefer to buy when stocks are cheaper. Still, it's a win-win for me, and hopefully thousands of Motley Fool Share Advisor subscribers. A win that our existing stocks are going up. And a win that even after today's gains, Scott Phillips still rates many of them as buys… including one of the day's largest gainers.
My SMSF is lucky — or I'd like to think skilled — enough to own BOTH yesterday's 3%+ winners. One of them is that high-growth 'new-breed' ASX technology stock I mentioned on Saturday, a stock I'm now up almost 150%. I got chatting to our ace stock-picker Scott Phillips about the company. He just reiterated his BUY rating on the company, telling Motley Fool Share Advisor members the "big story is their ongoing growth, and we were most pleased to see that continue unchecked."
About as good as it gets…
"Big stories" and "unchecked growth" is about as good as it gets for investors.
Which is more than I can say about bank stocks… I realise here at The Motley Fool, we're at odds with many other investors who have fallen head over heels for bank stocks, particularly the big four. And you know what? I can't blame them… especially as my family has profited enormously from riding the Commonwealth Bank of Australia (ASX: CBA) express train from float all the way through to now, with dividends reinvested. Talk about a fortune maker stock…
Better than a term deposit… or is it?
When you see charts like this one from Morgan Stanley, you can see why the affection with bank stocks might be ongoing for many Australian investors.
Source: The Age
And after NAB chief economist Alan Oster said on Sky News that he expects the RBA will have to cut the cash rate by the end of the year, by comparison to term deposits, the fully franked dividend yields on offer for bank stocks could look even more attractive. Each to their own, but I'm certainly not adding to my family's bank stocks.
In fact, more than anything, I'm getting a little nervous… not helped by the front page story ($) in The Australian Financial Review saying the average Sydney flat now costs more than the average Melbourne house. Sydneysiders might be quick to say "well, what do you expect?" and Melbournites might respond by saying "where's your backyard?" But more disturbingly was the story of the 2-bedroom Leichardt cottage, with no parking space, being snapped up by a first-home-buyer for a cool $920,000, well above expectations of $800,000.
I don't know about you, but when I bought my first home, just 13 years ago, $920,000 was well out of my financial reach. It'd be a mighty stretch today too. Then again, I didn't have the United Bank of Mum, Dad, Grandma and Grandpa to call upon. And nor were the banks seemingly falling over themselves to lend me huge multiples of my meagre salary.
House prices may not crash, but…
I'm not one of those pessimists who subscribes to the coming house price crash scenario. But when I see first home buyers and investors in a bidding frenzy, and with average rental yields for Melbourne houses as low as 3.4%, I do get just a tad nervous. Thank goodness therefore for fast-growing 'new-breed' tech stocks, huh? Some of them even pay a dividend.
